Copyright & the first sale rule

You’re in Bangkok for a business meeting and you have some time to kill. You wander around the streets and happen across a bookstore with some English-language books at amazing prices. You grap up 12 copies of the hottest best seller, bring them home for your friends…

U.S. Supreme Court

… And the copyright police show up to bust you for a copyright violation.

Why? Because the publisher doesn’t want you distributing the low-priced books produced for the Asian market in the high-priced marketplace of the United States. You don’t, the publisher says, have the right to dispose of those copies you legally bought overseas.

Sound fair?

Don’t worry, it isn’t. And you certainly can give away, donate or even resell anything you legally obtain, as long as it was legally produced (no pirated copies, folks), and not run afoul of any copyright protections.

That was the decision of the United States Supreme Court last week in the case of a young man from Thailand who helped finance part of his graduate education by doing just that: buying the low-priced versions of textbooks designed for the Asian market and reselling them at a profit in the much higher-priced U.S. market.

The case — Kirtsaeng v. John Wiley & Sons1 — was closely watched by libraries, used-book dealers, museums and others who feared that the case would impact their ability to deal with copyrighted items produced abroad, and tested the limits of two sections of the copyright law: the right of publishers to control distribution of copyrighted works and the right of owners who buy copyrighted works to dispose of copies they legally acquire.

First, of course, § 106 of the Copyright Act provides that

the owner of copyright under this title has the exclusive rights to do and to authorize … : (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; …2

The publisher, John Wiley & Sons, said it hadn’t authorized anyone to distribute copies of the low-priced Asian-market books in the United States.

And it relied as well on § 602 of the Act:

Importation into the United States, without the authority of the owner of copyright under this title, of copies … of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies … under section 106…3

The student, Supap Kirtsaeng, said that both § 106 and § 602 which relies on § 106 were limited by another part of the law, § 109:

Notwithstanding the provisions of section 106(3), the owner of a particular copy … lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy…4

This section is called the “first sale” section, it’s been recognized in the law since at least the early 1900s5, and it embodies “the very basic concept of copyright law that, once you’ve sold a copy legally, you can’t restrict its resale.”6

And the whole case boiled down to five words in that one section of the copyright statute. Just what did it mean to be “lawfully made under this title”? Did it mean — as the publisher argued — made under the terms it set, only for the Asian market? Or did it mean — as the student argued — made legally, period, regardless of any geographical limits a publisher tries to impose?

The Court, in a 6-3 opinion, voted with the student, holding that the first sale rule applies across the board, whether the copyrighted work is published in the United States or overseas. And in doing so it relied heavily on the arguments not of the student but of “associations of libraries, used-book dealers, technology companies, consumer-goods retailers, and museums” who joined the case on the student’s side:

The American Library Association tells us that library collections contain at least 200 million books published abroad… and that a geographical interpretation will likely require the libraries to obtain permission (or at least create significant uncertainty) before circulating or otherwise distributing these books. … Are the libraries to stop circulating or distributing or displaying the millions of books in their collections that were printed abroad?

Used-book dealers tell us that, from the time when Benjamin Franklin and Thomas Jefferson built commercial and personal libraries of foreign books, American readers have bought used books published and printed abroad. … But under a geographical interpretation a contemporary dozen copies of a foreign book for American friends might find that she had violated the copyright law. …

Technology companies tell us that “automobiles, microwaves, calculators, mobile phones, tablets, and personal computers” contain copyrightable software programs or packaging. … A geographical interpretation would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software. … Without that permission a foreign car owner could not sell his or her used car. …

Art museum directors ask us to consider their efforts to display foreign-produced works by, say, Cy Twombly, René Magritte, Henri Matisse, Pablo Picasso, and others. … A geographical interpretation, they say, would require the museumsto obtain permission from the copyright owners before they could display the work,… even if the copyright owner has already sold or donated the work to a foreign museum. … What are the museums to do, they ask, if the artist retained the copyright, if the artist cannot be found, or if a group of heirs is arguing about who owns which copyright?7

The Court concluded these would be “intolerable consequences” and that it would be “an absurd result that the copyright owner can exercise downstream control even when it authorized the import or first sale.”8

And the opinion flatly rejected the concern expressed by the publisher, and dissenting members of the Court, that publishers and other producers of copyright-protected works wouldn’t be able to divide foreign and domestic markets:

We concede that (a) publisher may find it more difficult to charge different prices for the same book in different geographic markets. But … we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights. … (T)he Constitution’s language nowhere suggests that its limited exclusive right should include a right to divide markets or … charge different purchasers different prices for the same book, say to increase or to maximize gain.9

So no, folks, you don’t have to worry about what you can do with that copy of the book of family history you bought on your last trip to your ancestral homeland. You can donate it to your local library, sell it, loan it, give it away. And you don’t have to hesitate before buying that book of abstracts of records from, say, the Netherlands being offered on eBay.

7 Responses to Copyright & the first sale rule

Thank you for a great explanation in terms that those of us “non-legal” folks can understand. I tried following the story in our local newspaper but even though it was supposedly written in English I couldn’t make head nor tails of it.

An interesting case- Would it translate to the internet.
If someone in US accessed material, held on a server in another country, that would breach copyright in US but is legal in that country I presume that under the above it would be lawful to download.
If they published that material I assume that it would still breach copyright as they would be publishing it in the USA even though the item was lawfully obtained in the first place.

Living in the UK It doesn’t affect me as our copyright laws are different and of course US Court decisions are not relevant but over here there has been a noticeable shift in Government to loosen some of the more draconian aspects of copyright whilst maintaining its important roles.